Case Study

What Works: Propelling Business and Job Growth Through Social Innovation

Objective: To highlight how a New Orleans business incubator has taken a cluster-based approach to accelerating social impact companies and growing jobs within the New Orleans economy.

Major Participants: City of New Orleans, Louisiana Office of Community Development, W.K. Kellogg Foundation, New Orleans Redevelopment Authority, Louisiana Economic Development, Green Coast Enterprises, and Capital One Investing for Good.

Background: Hurricane Katrina that devastated New Orleans in 2005 left more than 400,000 residents displaced. Businesses were forced to close as people fled the area. In 2006, a group of volunteers came together to form an organization called the Social Entrepreneurs of New Orleans (SENO) in order to promote social entrepreneurship and foster new business creation. SENO enlisted the support of Echoing Green, a global nonprofit that provides seed funding and technical assistance to emerging social entrepreneurs, to conduct an environmental scan of New Orleans entrepreneurs. After meeting and interviewing with nearly 100 entrepreneurs in 2008-2009, SENO was able to test several pilot programs to see which type of support best helped entrepreneurs bring their companies to the next level.

After several years of piloting, SENO relaunched with full-time staff in 2011 and was renamed in 2012 as Propeller: A Force for Social Innovation. Propeller is a 501c3 nonprofit that incubates early-stage ventures that have the potential to address the city’s most pressing social issues. By partnering with triple-bottom line real estate developer Green Coast Enterprises, Propeller was able to build out a 10,000 sq. ft. vacant building in order to build co-working, incubator and private office spaces for 80 startup companies.

How it Works: There are two major components of Propeller: a Social Venture Accelerator program and the 10,000 sq. ft. incubator facility. The Social Venture Accelerator offers 10-month business acceleration and subsequent alumni programming that connect social entrepreneurs with the resources needed to move their companies forward more quickly to reach financial sustainability. Each Propeller venture is paired with a paid consultant who works with the venture one-on-one throughout the program. They begin with an organizational assessment, which includes a financial, operational and programmatic review, and helps the business develop a scope of work. More than 150 professionals provide additional pro-bono services, including accounting, finance, graphic design, marketing and legal support. Propeller staff also provides policy support when innovative social ideas require advocacy. Moreover, Propeller provides key introductions to others—such as potential funders and customers. The goal is to have 80% of the cohort reach their top social impact and financial sustainability goals by the end of the 10-month program. Each cohort consists of approximately 15 new ventures that receive free office space through the incubator facility and peer learning opportunities.

The Propeller incubator facility offers affordable office and workspace for nearly 80 socially-minded ventures, from small business owners to freelancers and nonprofits. A variety of options allow people to stay for as little as $10 a day or to rent co-working desks for as little as $150/month and standard offices at $605/month. Member and Non-Members alike can rent the event and conference rooms, allowing for constant interaction between community members and entrepreneurs. In sharing workspaces, it provides all of the early-stage social innovators with cost savings.

Propeller offers a unique model of place-based social innovation within its four cluster areas of food, water management, public health and public education. Propeller’s end goal is systems change within the clusters, and the concentration of entrepreneurs working to fill bottlenecks and gaps in the cluster ecosystem provides a distinct collaborative advantage. For example, food access entrepreneur Jack and Jake’s (Propeller 2011) won a contract to aggregate and distribute local produce to the Healthy Food Collaborative (Propeller 2012). VEGGI Coop (Propeller 2012) purchased aquaponics growing towers from VertiFarms (Propeller 2012) and provided low-cost farmland to NOLA Tilth (Propeller 2012). Clusters are chosen based on Propeller’s policy and stakeholder relationships in the cluster and the entrepreneurial pipeline. To build pipeline, Propeller has a social innovation competition series called PitchNOLA.

Results for the Local Economy: Between 2011 and 2014, Propeller has incubated 35 new ventures. Collectively, these companies have generated $6 million in revenue and 72 new jobs while in the accelerator program. For instance, The Healthy School Food Collaborative (HSFC) now administers over $9.8 million in federal reimbursements to bring healthy, affordable school meals to 10,000 at-risk public school children in New Orleans. As a result of incubating at Propeller, HSFC staff facilitated connections with local food suppliers – such as Jack and Jake’s, thereby supporting and growing the local food economy. Meanwhile, The Farm City Initiative has facilitated over 120 agriculture redevelopment projects throughout New Orleans.

Other socially-minded ventures include the Griffin Law Group, which has won over $300,000 in benefits for disabled children since incubation, and Birthmark, which has provided 300 low-income and disadvantaged women with birthing services. For every woman who can afford to buy Birthmark’s services, Birthmark provides another woman with services who can otherwise not afford them. Birthmark plans to open New Orleans’ first birthing center in 2015.

Roughly 50% of Propeller companies are native New Orleans residents; 60% of all entrepreneurs were New Orleans residents pre-Hurricane Katrina; roughly 50% are Low-Moderate Income. Forty percent of Propeller companies are led by a minority founder or co-founder.

Remaining Challenges: Initially, it was difficult for Propeller to garner support and resources because it lacked a track record of success and had limited capacity. Propeller, which started as SENO, was a volunteer group, and it took a few years before they could really establish success metrics. Their first big break was when the state government funded them to provide technical assistance for small businesses based on what they had accomplished with pro bono support. By combining state aid with volunteer hours and pro bono support, Propeller now has built a positive reputation and, unlike some incubators, now has an established base of funding.

At this point, the primary challenge Propeller faces is whether to delve deeper into its cluster-based approach or to spread resources across a range of industries. Propeller will likely continue to invest in its four targeted sectors, but this will require more intensive policy work if they hope to influence social systems in the manner it hopes.

Lessons Learned: Andrea Chen, co-founder and executive director of Propeller, offers two pieces of advice for other incubators. First, be sure to stay true to your mission and focus. Learn to say no, and be ready to say yes and move full speed ahead when presented with an opportunity that fits in with your incubator’s mission.

Second, understand who your partners are and make strategic alliances. Propeller would not be where it is today without the support of several other actors. For instance, Green Coast Enterprises was a real estate firm that partnered with Propeller in order to renovate the old tire shop into the existing incubator space. Had Green Coast Enterprises not been a partner, Propeller would have had to fundraise nearly $2 million to retrofit the space—a feat for any business, let alone a startup company. Similarly, the City of New Orleans has become a fantastic partner. Through the Lots of Progress competition, the City provides vacant land for Propeller entrepreneurs who have innovative ideas for land reuse.